Steve Blank Hands A New Owner’s Manual to Startup Founders

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If you look closely at the cover of Steve Blank’s new book, The Startup Owner’s Manual, you’ll see that it shows an exploded view of the transmission from an automobile engine. Leonardo da Vinci invented the exploded view more than 500 years ago, and it has stayed with us as a visualization tool, because it’s great for showing relationships between the parts of an object. But it’s also utterly unrealistic (as many of Leonardo’s fancies were). In the real world, once you’ve taken apart something as complex as an engine, you’ve usually got a huge mess on your hands, and no obvious way to put it back together.

Startups are sort of like that. You can boil down your dream for wowing customers, crushing competitors, and taking over the world into a few orderly spreadsheets and PowerPoint decks—and you might even be able to get a few VCs to buy your pitch. But making your plan happen is another thing entirely. As Blank likes to say, no business plan survives its first contact with the real world.

Read enough of Blank’s books and attend enough of his talks, as I have, and you begin to see the inescapable truth of his arguments. A startup is not a business, he argues. It’s a machine built (and often rebuilt on the fly) to find a viable business as quickly as possible, preferably before the fuel runs out. Once it’s found that business, it can graduate to being a real company and spending real capital. In the meantime, it’s all about the search. And that’s the process Blank has been thinking, writing, lecturing, and teaching about for years.

Blank’s first book on entrepreneurship, written six years after his marketing-tech company E.piphany raised $66 million in a 1999 IPO, was called Four Steps to the Epiphany, and you’ll see sticky, dog-eared copies of it on the shelves of many serial startup founders. It codified “customer development”—the idea that a startup’s job is to turn its hypotheses into facts by listening to real customers about whether they’d use a proposed product and what features they really need. But that book, not to put too fine a point on it, was a turgid, rambling, difficult read—and a lot has happened in the world of entrepreneurship training since then. For one thing, there was the emergence of Eric Ries’s “lean startup” philosophy, which argues that companies should apply the rapid-iteration method from agile software development to their entire business. Then there’s the business model canvas, Alexander Osterwalder’s popular method for visualizing a startup’s value proposition, customers, and revenue streams.

Blank has been incorporating all of these ideas into the entrepreneurship courses he’s been teaching for Berkeley, Stanford, and the National Science Foundation. But there was no updated textbook that laid out Blank’s full entrepreneurship curriculum. That is why he and co-author Bob Dorf, a Connecticut-based serial entrepreneur, have now published The Startup Owner’s Manual: A Step-by-Step Guide for Building a Great Company.

The book is long—573 pages—but it’s far more organized, methodical, and textbook-like than Four Steps, and is therefore likely to be snapped up by B-school teachers and students, as well as entrepreneurs. The 12 chapters are broken into two big sections, one on “customer discovery”—the process of testing the founders’ vision against the problems and needs of real-world customers—and one on “customer validation,” where you scale up the product to see if it’s got the potential to be a big business. The book has material for every type of entrepreneur, but it helpfully highlights the sections that may only pertain to the crazy world of Internet startups. (Sections about selling physical goods are in serif type, while sections with advice for Web and mobile startups are in sans serif.)

I confess I didn’t read The Startup Owner’s Manual from cover to cover before writing this review and Q&A. But that’s okay—Blank gave me permission not to. “This definitely isn’t a book,” he says. Rather, it’s an actual manual—something you should dip into as needed. “Reading it any other way, you will get frustrated and exhausted,” Blank says.

I talked with Blank about the book earlier this week. Here’s a version of our conversation, edited for length.

Wade Roush: The Startup Owner’s Manual is extremely detailed—I’d almost say exhaustive. How long have you been working on it?

Steve Blank: I decided to do this, theoretically, the first time I got an e-mail about a typo in the first book. I have been mentally storing things away since then. But how I work may be different. I pay attention to a lot of stuff, and it’s not until a pattern fits that I finally make a move. The real problem in this case wasn’t the typos, it was trying to understand what was going on with Web and mobile startups. The more distance I got from Four Steps, the more it seemed like [building a Web or mobile company] was a truly different process from traditional customer development. I was trying to figure out how that was going on. But it became clear gradually that it wasn’t a different process—it was a different speed, with different channels. What took so long was struggling with the “unified field theory” of startups.

WR: What is that theory?

SB: The more I thought about what we and Eric Ries and Alexander Osterwalder were building, the more it seemed we are truly describing a new way to think about why startups are different. Large companies execute known business models. Startups search for business models. The mistake we have been making, both in entrepreneurship and in entrepreneurship education, is to … Next Page »

13 responses to “Steve Blank Hands A New Owner’s Manual to Startup Founders”

Joao — Have no far, Steve Blank says an e-book version of the book is coming (but probably on iBooks before Kindle). The book has a lot of special formatting and Blank told me it isn’t a simple matter to make it look right as an e-book.

I have an issue with the lack of an ebook as well. I read a large part of Steve’s other book and he talks a lot about connecting with customers , listening to them, and understanding your market. The fact that he didn’t publish an ebook makes me feel that he doesn’t understand his own customers, doesn’t listen to them, and writes about principles he doesn’t practice. In short, it makes me feel like he isn’t particularly relevant. Hoping I’ll be proven wrong on this one.

Eric — As I just mentioned, Steve says an e-book version is on the way. And no one is a bigger fan of e-books than me. But just take my word for it — this is one book where you probably want to buy a physical copy (perhaps in addition to a digital version). It’s a textbook, not really a book you sit down and page through. You need to be able to dog-ear the important pages, scribble on it, put it on the shelf, pull it down when you’re in a bind, spill coffee on it, etc. It’s still a little harder to do all that with an e-book!

Wade- GREAT piece. Steve has a lot of interesting ideas, and draws logical associations in entrepreneurship to his days in the Air Force, like the OODA loop for strategic thinking.

This is a reference book for the shelf, certainly will be picking up a hard copy. For folks wanting a primer in ebook format, there is a well-designed shorthand version on Customer Development in PDF here: http://custdev.com/

But then artists don’t care if their “model” can be immediately leveraged into a successful business. As programmers we are still allowed to choose what we do, so it’s always good to bring up the fact that there are differences.

The Startup Owner’s Manual book is dry and formulaic, but it has one basic insight that’s worth repeating: don’t bother making anything until you discover & understand who’s going to buy.

Many aspiring entrepreneurs fancy themselves as undiscovered geniuses, but the reality is that bootstrapping a product or company is much more formulaic than inspired — it requires lots of gumshoe work finding and listening to potential customers. Any clown can make something. It’s the clowns who make something that people will buy that count.